European stocks resumed their losses this week as interest-rate cuts failed to ease concern the economy and corporate earnings will deteriorate.
The Dow Jones STOXX 600 Index dropped 1.1 percent in the five days, following the steepest weekly gain since 2001 a week earlier.
ArcelorMittal sank 13 percent after the world’s biggest steelmaker cut production and Lafarge SA slid 9.4 percent as the largest cement producer abandoned its 2010 earnings target. Money managers Man Group PLC and 3i Group PLC dropped more than 10 percent after the value of their assets declined.
Europe’s STOXX 600 retreated 2.47 to 219.6, taking this year’s loss to 40 percent as almost US$700 billion in credit losses dragged down economic growth. Profit concern this week also overshadowed speculation that US President-elect Barack Obama may boost growth with a stimulus package.
Policymakers in the euro zone, the UK, Switzerland and Denmark lowered rates to ease the effects of the global credit squeeze. The Bank of England unexpectedly cut its benchmark lending rate by 1.5 percentage points to the lowest since 1955. The European Central Bank reduced borrowing costs by 50 basis points to 3.25 percent.
Analysts have scaled back their estimates for this year’s profits at STOXX 600 companies to a 6.8 percent drop, from an 11-percent increase forecast at the start of the year, Bloomberg data show.
The European Commission said on Monday the region’s economy probably entered a recession in the third quarter and trimmed its growth forecast for this year to 1.2 percent from 1.3 percent.
The STOXX 600 declined 13 percent last month, its worst monthly performance since September 2002, even after climbing 12 percent in the previous week.
National benchmark indexes fell in seven of 18 western European markets.
Germany’s DAX Index dropped 1 percent. France’s CAC 40 slipped 0.5 percent, while the UK’s FTSE 100 advanced 0.3 percent.
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